RBF RIG CORPORATION, MUMBAIversusTHE COMMISSIONER OF CUSTOMS (IMPORT), MUMBAI

                   . [2011] 2 S.C.R. 691


             RBF RIG CORPORATION, MUMBAI                            A
                               v.
THE COMMISSIONER OF CUSTOMS (IMPORT), MUMBAI
          (Civil Appeal No. 3478 of 2006)

                    FEBRUARY '08, 2011
                                                                    B
             [D.K. JAIN AND H.L. DATIU, JJ.)

      Customs Act, 1962 - Refund claim under - Importer's
claim for refund of customs duty - Rejection by the
adjudicating authority on the ground that assessment not            c
challenged - Adjudicating authority ignored the specific
directions by the High Court to consider the refund claim on
basis of the Essentiality Certificates - Justification of - Held:
Not Justified - Subordinate Tribunal cannot examine whether
a direction issued by the High Court under its writ powers was      0
correct and refusal to carry it out as such, amounts to denial
of justice and destroys the principle of hierarchy of courts in
the administration of justice - Same court can be approached
for clarification/modification or the superior forum for
appropriate relief in case the directions issued by the court
is contrary to statutory provision or well established principles   E
of law - On facts, the revenue department did not question
the order passed by the High Court, which order has reached
finality - Thus, the adjudicating authority cannot be permitted
to circumvent the order passed by the High Court - Customs
authorities directed to consider the importer's claim for refund    F
of customs duty - Constitution of India 1950 - Article 226 -
Administration of justice.
     The appellant imported consignments of certain
goods in pursuance to the contract with ONGC and filed              G
Bills of Entry for the same. The said imported goods were
exempted from customs duty under a Notification which
required the importer to produce Essentiality Certificates
issued by Director General of Hydrocarbons (DGH) and
                              691                                   H
      692     SUPREME COURT REPORTS             [2011] 2 S.C.R

 A the DGH issued Essentiality Certificate on the basis o·
   recommendatory letters issued by ONGC. However,
   ONGC refused to entertain the appellant's request for the
   recommendatory letters and as such DGH refused to
   issue Essentiality Certificates. The appellant had to clear
 8 the consignments of the imported goods on full payment
   of the customs duty. The appellant filed a writ petition
   challenging the refusal of ONGC to issue
   recommendatory letters and refusal of DGH to issue
   Essentiality Certificate. The High Court passed an interim
 C order. In pursuance to the direction by the High Court,
   ONGC issued recommendatory letters and on the
   strength of these, DGH issued Essentiality Certificates to
   the appellant. The High Court then disposed of the writ
    petition directing the custom authorities to dispose of the
   appellant's refund claim of customs duty taking into
 D consideration the Essentiality Certificate issued by DGH.
   The appellant filed a refund claim in respect of customs
   duty paid on the import of goods. The Deputy
    Commissioner of Customs rejected the claim. The
   Commissioner as also the Tribunal rejected the appeals.
 E Therefore, the appellant filed the instant appeal.
            Allowing the appeal, the Court
          HELD: 1.1 Article 226 of the Constitution confers
      powers on the High Court to issue certain writs for the
. : F enforcement of fundamental rights conferred by Part-Ill
      of the Constitution or for any other purpose. The
      question, whether any particular relief should be granted
      under Article 226 of the Constitution depends on the facts
      of each case. The guiding principle in all cases is
    G promotion of justice and prevention of injustice. In the
      instant case, the High Court, has moulded the relief in
      such a manner to meet out justice to an aggrieved
      person. It is not open to the subordinate Tribunal to
      examine whether a direction issued by the High Court
  H
      RBF RIG CORPN, MUMBAI v. COMMISSIONER OF               693
•.
              CUSTOMS (IMPORT), MUMBAI
     under its writ powers was correct and refusal to carry it      A
     out as such amounts to denial of justice and destroys the
     principle of hierarchy of courts in the administration of
     justice. [Paras 15 and 18) [700-D-E; 701-G-H; 702-A]

         Comptroller and Auditor-General of India v. K. S.          B
     Jagannathan (1986) 2 SCC 679; Dwarkanath v. /TO AIR 1966
     SC 81; Bishnu Ram Borah v. Parag Saikia (1984) 2 SCC
     488 - referred to.

          1.2. If for any reason, the subordinate authority is of
     the view that the directions issued by the court is contrary   C
     to statutory provision or well established principles of
     law, it can approach the same court with necessary
     application/petition for clarification or modification or
     approach the superior fo;um for appropriate reliefs. In the
     instant case, the respondents have not questioned the          D
     order passed by the High Court, which order has
     reached finality. In such circumstances, the adjudicating
     authority cannot be permitted to circumvent the order
     passed by the High Court. Therefore, the refund claim of
     appellant was erroneously rejected by the Deputy               E
     Commissioner of Customs ignoring the specific
     directions issued by the High Court to the customs
     authorities to dispose of the appellant's claim of refund
     by taking into consideration the Essentiality Certificates
     issued by the DGH. The Deputy Commissioner of                  F
     Customs rejected the refund claim of appellant on the
     ground of unjust enrichment and failure to challenge the
     assessment of the Bills of Entry at the appellate stage,
     without even considering the Essentiality Certificates in
     the light of specific and binding directions of the High       G
     Court.[Paras 19 and 20) [702-G-H; 703-A-D]

         1.3. The Customs Authorities are directed to consider
     the appellant's claim of refund of customs duty paid
     under protest in accordance with the directions issued
                                                                    H
    694      SUPREME COURT REPORTS               [2011] 2 S.C.f


A by High Court as expeditiously as possible. [Para 21.
  [703-E-F]

      CCE v. Flock (India) (P) Ltd. (2000) 6SCC 650; Priya
  Blue Industries Ltd. v. Commissioner of Customs (Preventive}
B (2005) 10 SCC 433; Mafatlal Industries Ltd. v. Union of India
  (1997) 5 sec 536 - referred to.

         Halsbury's Laws of England, 4th Edn., Vol. I, para 89 -
    referred to.

c                        Case Law Reference:
          (1997) 2 sec 536        Referred to.         Para 11
          (2000) 6 sec 650        Referred to.         Para 13
          (2005) 1o sec 433       Referred to.         Para 13
D
          (1986) 2 sec 679        Referred to.         Para 15
          AIR 1966 SC 81          Referred to.         Para 16
          (1984) 2 sec 488        Referred to.         Para 18
E
         CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    34 78 of 2006.

      From the Judgment & Order dated 12.5.2006 of the
  Customs, Excise and Gold (Control} Appellate Tribunal, West
F Zonal Bench, in Appeal Nos. C/790, 793 and 794 of 2005-.
  Mum.
      Harish N. Salve, Amar Dave, Armaan Dalal, Nandini Gore,
  Debmalya Banerjee, Abhishek Roy, Kamal Deep Dayal, Manik
G Karanjawala (for Karanjawala & Co.) for the Appellant.
          K. Swami, Arti Singh, B.K. Prasad for the Respondent.
          The Judgment of the Court was delivered by
H         H.L. DATTU, J. 1. This appeal is directed against the,
 . RBF RIG .CORPN, MUMBAI v. COMMISSIONER OF                 695
    CUSTOMS (IMPORT}, MUMBAI [H.L. DATTU, J.)
 Order of the Customs, Excise and Gold (Control} Appellate A
 Tribunal, West Zonal Bench [hereinafter referred to as 'the
 Tribunal') dated 12.05.2006.

      2. The issue raised for our consideration and decision in
 this appeal is: 'Whether the adjudicating authority was justified   B
 in rejecting the appellant's claim for refund of the duty paid
 under the Customs Act. 1962 (hereinafter referred to as, "the
 Act") without considering Essentiality Certificates, produced on
 a later date, particularly, in view of the specific and positive
 directions issued by the Delhi High Court.'
                                                                     c
      3. The brief factual matrix involved in this appeal are:

       The appellant is an importer of spares and stores for use
  on rigs for petroleum operations pursuant to contract with Oil
  and Natural Gas Corporation Limited [hereinafter referred to as 0
  'ONGC'). The appellant has imported three consignments of
  spares and duly filed the Bills of Entry dated 10.06.2002 and
  25.06.2002 in respect of these imported goods. These
, imported goods are covered by List 12 of Notification No. 21/
  2002, Customs, dated 01.03.2002 as goods exempted from E
  customs duty on fulfilling Condition 29 of the said Notification,
  which requires the importer to produce Essentiality Certificates
  issued by Director General of Hydrocarbons [hereinafter
  referred to as 'the DGH'] to the effect that these imported goods
  were required for the petroleum operations. The DGH issues F
  the Essentiality Certificates only on the strength of
  recommendatory letters issued by ONGC.

      4. The appellant had requested ONGC to issue
 recommendatory letters in order to enable the DGH to issue
 the Essentiality Certificates, which were not granted. The DGH, G
 in the absence of such recommendatory letters, refused to
 entertain the appellant's request for the Essentiality Certificates.

     5. In this backdrop, the appellant requested the Customs
 authority, vide endorsement on Bill of Entry presented on           H
    696      SUPREME COURT REPORTS                    [2011] 2 S.C.R


A   10.06.2002 for one consignment and vide letter dated
    28.06.2002 for other two consignments, to make provisional
    assessment of the said imported goods in view of the pending
    proceedings for procurement of the Essentiality Certificates.
    However, these requests were not acceded to, and the
B   appellant, on account of commercial exigencies, had cleared
    the said three consignments of the imported goods on full
    payment of the customs duty pursuant to the Order of the
    Customs Authority dated 15.06.2002, 03.07.2002 and
    09.07.2002.
c        6. In the month of July 2002, the appellant filed a Writ
    Petition before the Delhi High Court inter-alia challenging the
    refusal of ONGC to issue the requisite recommendatory letters
    and also the refusal of the DGH to issue the Essentiality
    Certificates. The High Court, by its ad-interim order dated
D   30.07.2002, directed ONGC to take a final decision in the
    matter within a fixed time frame and granted liberty to the
    appellant to clear consignments on payment of duty under
    protest and subject to further orders of the High Court.

E        7. Subsequently, ONGC, whilst complying with the
    abovementioned direction,s of the High Court, issued
    recommendatory letters and on the strength of these
    recommendatory letters, the DGH issued Essentiality
    Certificates to the appellant. In view of this, the said Writ Petition
F   was finally disposed of by the High Court by its order dated
    11.03.2003, wherein the High Court directed the customs
    authorities to dispose of the appellant's refund claim of customs
    duty paid by taking into consideration the Essentiality .
    Certificates issued by the DGH in the following terms:

G         "Mr. Setalvad, learned senior counsel for the petitioners,
          on the other hand, submits that in view of the fact that
          almost all essentiality certificates have been issued by
          Respondent No. 2 on the recommendation of Respondent
          No. 3 the only controversy which survives for consideration /
H         is with regard to the disposal of the refund applications
- RBF RIG CORPN, MUMBAI v. COMMISSIONER OF                   697
   CUSTOMS (IMPORT), MUMBAI [H.L. DATIU, J.]

    filed by the petitioner with the customs authorities. He,        A
    therefore, prays that instead of adjourning the matter, it may
    be disposed of with a direction to the custom authorities
    to take final decision on the refund applications filed by the
    petitioner.
                                                                 B
    We find substance in the suggestion made by learned
    counsel for the Petitioner. Accordingly, we dispose of the
    Writ Petition with a direction to the customs authorities to
    consider and dispose of such refund claims as had been
    preferred by the petitioner with them by taking into C
    consideration the essentiality certificates, issued on the
    petitioners by Respondents No. 2. We further direct that
    the said applications shall be disposed of by a speaking
    and reasoned order after giving an opportunity of hearing
    to the petitioners. The applications shall be disposed of
    as expeditiously as practicable but in any case not later D
    then eight weeks from the date of receipt of a copy of this
    order."
           (Emphasis supplied)

     8. Accordingly, the appellant filed refund claim dated E
06.05.2003 and 04.06.2003 in respect of the customs duty paid
on the import of the said three consignments, which was .
rejected by the Deputy Commissioner of Customs vide its order
dated 23.12.2004 on the ground of unjust enrichment and failure
to challenge the assessment of the Bills of Entry by filing an F
appeal before the Appellate Forum. Reliance was also placed
on the judgment of this court in CCE v. Flock (India) (P) Ltd.,
(2000) 6 SCC 650 and Priya Blue Industries Ltd. v.
Commissioner of Customs (Preventive), (2005) 10 SCC 433.
Being aggrieved, the appellant preferred an appeal against the G
Order of Deputy Commissioner of Customs before the
Commissioner (Appeals). This appeal of the appellant was
rejected by the Commissioner (Appeals) vide Order dated
18.04.2005. The appellant, aggrieved by the Order of
Commissioner (Appeals), further preferred an appeal before the H
    698      SUPREME COURT REPORTS                [2011) 2 S.C.R


A Tribunal. The Tribunal, by its impugned Order dated 12.05.2006,
  dismissed the appeal. Aggrieved by these orders, the appellant
  is before us in this appeal filed under Section 130-E of the Act.
        9. Shri Harish N. Salve, learned senior counsel and Shri
    Amar Dave, learned counsel, appear for the appellant and the
8
    Revenue is represented by Shri K. Swamy, learned counsel.
    We will refer to their submissions while dealing with the issue
    canvassed before us.
       10. This Court in Flock (supra) has held that a refund claim
C under the Central Excise Act, 1944 is not maintainable, if an
  assessment order, which is appealable, has not been
  challenged. In other words, it was held that such assessment
  order is not liable to be questioned and reopened in a
  proceeding for refund, which is in the nature of execution of a
D decree or order. Further, this Court in Priya Blue (supra),
  adopting the ratio of the Flock (supra), has held that a refund
  claim under the Act is not an appeal proceeding and the officer
  considering a refund claim cannot sit in appeal or review an
  assessment order made by a competent authority. Such
E assessment order is final unless it is reviewed and/or modified
  in an appeal.
       11. The learned senior counsel Shri. Harish N. Salve
  submits that the decisions of this court in Flock (supra) and
  Priya Blue (supra) are incorrectly decided and require
F reconsideration. He submits that the present appeal should be
  referred to a larger bench to finally and correctly decide the
  questions of law arising in this appeal. He further submits that
  the appellant is entitled to claim refund by virtue of Section 27
  of the Act, even after the assessment order of imported goods
G has attained the finality. He contends that the claim of refund
  under Section 27 after final assessment order is different from
  the refund claim under Section 18, which is after provisional
  assessment of the imported goods. He submits that Section
  27 of the Act provides that the claim for refund shall be made
H within a period of one year or six months. This short period of
 RBF RIG CORPN, MUMBAI v. COMMISSIONER OF                       699
  CUSTOMS (IMPORT), MUMBAI [H.L. DATTU, J.]
limitatio·n indicates that a claim for refund is maintainable even      A
without preferring an appeal against the assessment order. In
other words, if the claim for refund is permissible only after filing
of an appeal by the party, then Section 27 of the Act will
become redundant as the appeal proceedings would never be
over within abovementioned period. In this regard, learned              B
senior counsel further argues at great length by analyzing
Section 27 of the Act in view of its legislative history and the
philosophy and the broad scheme of the Act vis-a-vis Central
Excise Act, 1944 and Income Tax Act, 1961. He further
contends that decisions of this Court in Flock (supra) and Priya        c
Blue (supra) have ignored or not considered tl'\e decision of
nine Judge-Bench of this court in Mafatlal lndl;lstries Ltd. v.
Union of India, (1997) 5 SCC 536, which suggests that if the
duty has been collected contrary to law, i.e., on:, account of a
misinterpretation or misconstruction of a provision of law, rule,
                                                                        0
notification or regulation and the assessment order has attained
finality, then the assessee is entitled to clalm refund in
accordance with section 11 B of Central Excise Act, 1944 read
with Rule 11 of the Central Excise Rules, 1944 on account of
subsequent discovery of such mista~e of law by any judgment             E
of High Court or of this Court.
      12. Shri K. Swamy, learned counsel for the Revenue,
justifies the reasoning and the conclusions reached by the
Tribunal.
                                                                 F
      13. In our considered view, the elaborate submissions
made by the learned senior counsel for the appellant
challenging the correctness of Flock (supra) and Priya Blue
(supra) may not be necessary to be considered in the light of
.the peculiar facts involved in the presEmt appeal. Ergo, we are G
not inclined to go into the merits of Shri Salve's arguments.
     14. The facts in the present case are that, since. the request
of the appellant for issuance of Essentiality Certiticates was
delayed, the appellant was constrained to approaqh the Delhi
                                                                        H
    700      SUPREME COURT REPORTS                   [2011) 2 S.C.R.


A High Court by filing a petition under Article 226 of the
  Constitution of India, inter-a/ia requesting the Court to direct
  ONGC to consider the request of the appellant for issuance of
  Essentiality Certificates vide its letter dated 21st May, 2002.
  On a concession made by learned counsel for ONGC, the
B Court, while permitting the parties to file their pleadings, further
  observed that the appellants, if they are willing to get their
  consignment of spare parts released, may do so by paying the
  customs duty as demanded under protest subject to final orders
  in the petition. The writ petition was finally disposed of by the
c Court by its order dated 11th March, 2003, in the presence .of
  learned counsel for respondents, wherein the Court specifically
  directed the respondents to consider the refund claims
  preferred by the petitioners taking into consideration the
  Essentiality Certificates issued by ONGC.

D     15. Article 226 of the Constitution confers powers on the
  High Court to issue certain writs for the enforcement of
  fundamental rights conferred by Part-II I of the Constitution orfor
  any other purpose. The question, whether any particular relief
  should be granted under Article 226 of the Constitution,
E depends on the facts of each case. The guiding principle in all
  cases is promotion of justice and prevention of injustice. In
    Comptroller and Auditor-General of India v. K. S. Jagannathan,
    (1986) 2 SCC 679, this Court has held:

F         "20. There is thus no doubt that the High Courts in India
          exercising their jurisdiction under Article 226 have the
          power to issue a writ of mandamus or a writ in the nature
          of mandamus or to pass orders and give necessary
          directions where the government or a public authority has
          failed to exercise or has wrongly exercised the discretion
G         conferred upon it by a statute or a rule or a policy decision
          of the government or has exercised such discretion mala
          fide or on irrelevant considerations or by ignoring the
          relevant considerations and materials or in such a manner
          as to frustrate the object of conferring such discretion or
H
   RBF RIG CORPN, MUMBAI v. COMMISSIONER OF 701
    CUSTOMS (IMPORT), MUMBAI [H.L. DATIU, J.]
      the policy for implementing which such discretion has been       A
      conferred. In all such cases and in any other fit and proper
      case a High Court can, in the exercise of its jurisdiction
      under Article 226, issue a writ of mandamus or a writ in
      the nature of mandamus or pass orders and give
      directions to compel the performance in a proper and             B
      lawful manner of the discretion conferred upon the
      government or a public authority, and in a proper case, in
      order to prevent injustice resulting to the concerned parties,
      the court may itself pass an order or give directions which
      the government or the public authority should have passed        c
      or given had it properly and lawfully exercised its
      discretion."

       16. In Dwarkanath v. /TO, AIR 1966 SC 81, this Court
  pointed out that Article 226 is designedly couched in a wide
· language in order not to confine the power conferred by it only      D
  to the power to issue prerogative writs as understood in
  England, such wide language being used to enable the High
_Courts "to reach injustice wherever it is found" and "to mould
  the reliefs to meet the peculiar and complicated requirements
 ~~oooo~·                                                              E
       17. In Ha/sbury's Laws of England, 4th Edn., Vol. I, para
 89, it is stated that the purpose of an order of mandamus

      "is to remedy defects of justice; and accordingly it will
      issue, to the end that justice may be done, in all cases         F
      where there is a specific legal right and no specific legal
      remedy for enforcing that right; and it may issue in cases
      where, although there is ari alternative legal remedy, yet
      that mode of redress is less convenient, beneficial and
      effectual." ·                                                    G

       18. The High Court, in the present case, has moulded the
 relief in such a manner to meet out justice to. ~n aggrieved
 person. It is not open to the subordinate Tribunal to examine
 whether a direction issued by the High Court under its writ           H
    702       SUPREME COURT REPORTS                    [2011] 2 S.C.R.


A powers was correct and refuse to carry it out as such amounts
  to denial of justice and destroys the principle of hierarchy of
  courts in the administration of justice. This court in Bishnu Ram
  Borah v. Parag Saikia, (1984) 2 SCC 488, has held:

          "11. It is regrettable that the Board of Revenue failed to
B
          realize that like any other subordinate tribunal, it was
          subject to the writ jurisdiction of the High Court under
          Article 226 of the Constitution. Just as the judgments and
          orders of the Supreme Court have to be faithfully obeyed
          and carried out throughout the territory of India under Article
c         142 ot the Constitution, so should be the judgments and
          orders of the High Court by all inferior courts and tribunals
          subject to their supervisory jurisdiction within the State
          under Articles 226 and 227 of the Constitution. We cannot
          but deprecate the action of the Board of Revenue in
D         refusing to carry out the directions of the High Court. In
          Bllopal Sugar Industries Limited v. /TO, (1961) 1 SCR
          474, the Income Tax Officer had virtually refused to carry
          out the clear and unambiguous directions which a superior
          tribunal like the Income tax Appellate Tribunal had given
E         to him by its final order in exercise of its appellate powers
          in respect of an order of assessment made by him. The
          Court held that such refusal was in effect a denial of justice
          and is furthermore destructive of one of the basic principles
          in the administration of justice based as it is in this country
F         on the hierarchy of courts. The facts of the present case
          are more or less similar and we would have allowed the
          matter to rest at that but unfortunately the judgment of the
          High Court directing the issue of a writ of mandamus for
          the grant of a liquor licence to Respondents 1 and 2 cannot
G         be sustained."
       19. We hasten to add, if for any reason, the subordinate
  authority is of the view that the directions issued by the Court
  is contrary to statutory provision or well established principles
H of law, it can approach the same Court with necessary
 RBF RIG CORPN, MUMBAI v. COMMISSIONER OF                    703
  CUSTOMS (IMPORT), MUMBAI (H.L. DATIU, J.]
application/petition for clarification or modification or approach   A
the superior forum for appropriate reliefs. In the present case,
as we have already noticed, the respondents have not
questioned the order passed by the High Court, which order
has reached finality. In such circumstances, we cannot permit
the adjudicating authority to circumvent the order passed by the     B
High Court.

     20. Therefore, in our view, the refund claim of appellant has
been erroneously rejected by the Deputy Commissioner of
Customs vide its order dated 23.12.2004 ignoring the specific        C
directions issued by the Delhi High Court vide its order dated
11.03.2003, to the customs authorities to dispose of the
appellant's claim of refund by taking into consideration the
Essentiality Certificates issued by the DGH. The Deputy
Commissioner of Customs has rejected the refund claim of
appellant on the ground of unjust enrichment and failure to          D
challenge the assessment of the Bills of Entry at the appellate
stage, without even considering the Essentiality Certificates in
the light of specific and binding directions of the High Court.

     21. In view of the above, we allow this appeal and direct· E
the Customs authorities to consider the appellant's claim of
refund of customs duty paid under protest in accordance with
the directions issued by Delhi High Court vide its order dated
11.03.2003 as expeditiously as possible. In the facts and
circumstances of the case, we direct the parties to bear their F
own costs.

N.J.                                            Appeal allowed.